Finance Minister Muhammad Aurangzeb on Wednesday indicated that Pakistan’s policy rate could be reduced further this year, citing a steady decline in both average and core inflation.
His remarks have strengthened market expectations that the State Bank of Pakistan (SBP) may opt for additional monetary easing to boost economic growth.
Speaking at an event, Aurangzeb stressed the independence of the central bank and its Monetary Policy Committee (MPC) in setting the policy rate and managing the market-based exchange rate. “At present, the policy rate is at 11%. I am always very careful to respect the autonomy of the State Bank of Pakistan and the MPC,” he said.
However, he shared his personal outlook, expressing optimism about the prospect of further cuts. “Given the current inflation trends — whether average or core — I believe there is room for more action on the policy rate. I am hopeful that, during this calendar year, we will see the policy rate moving south,” he added.
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His comments come as the economy shows signs of stabilization after a period of tight monetary policy aimed at taming inflation. Earlier this year, the SBP lowered its benchmark interest rate to 11% amid sustained disinflationary pressures.
Analysts have been anticipating more monetary easing as authorities work to balance inflation control with measures to stimulate growth.